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Monday, 16 January 2012

Prague seeks routes to slash public transport deficit

Level: Advanced / C1

Here is a longer than usual reading lesson for you. It is about public transport in the beautiful city of Prague (where I am lucky enough to live!).

A            How good do you think the public transport system is in Prague?

B            How is it financed? Does it make a profit or a loss?

C            Check the meaning of these words before reading the article:
               1          slash                                        2          paymaster
               3          praise                                      4          burden            
               5          (un)bearable                        6          raid
               7          diminish                                 8          hike
               9          keen                                       10        envy

E                        What do the following phrasal verbs, expressions and idioms mean:
               1          face up to                                2          back on track
               3          in the front line                     4          break even
               5          stem from                                6          go down this route
               7          wipe out                                   8          cushion the blow
               9          quick fix                                  10        get around

F                        Read the article and answer these questions:
               1          Who funds Prague’s public transport system?
               2          How many trips are made on the system each year?
               3          How big is DPP’s budget deficit?
               4          How much does a basic ticket cost?
5          True or false: DPP is buying buses from Škoda.

G            How do you think the situation should be solved?
               What do you think about passengers who do not pay?!

Prague seeks routes to slash public transport deficit
Prague’s much-praised and heavily-subsidized public transport system is facing tough times as its council paymaster faces up to how to deal with a cash crisis. The Czech capital’s well-developed bus, tram and metro system is frequently praised by tourists and visiting transport experts alike; but is one of the city’s biggest burdens thanks to high payouts to cover operational expenses and investment plans. On average it eats up a quarter of the city’s overall expenditure.

That burden has been covered by a growing overall deficit from 2009, but now Prague City Council is now seeking to get its finances back on track with its transport company, Dopravní podnik hlavního města Prahy (DPP), in the front line for some tough decisions.

The Council has a 50-page analysis of steps it can take to relieve the debt burden of DPP. It offers three basic scenarios for the future of the capital’s transport system, which is used for an estimated 1.22 billion trips a year (about 55 percent of all journeys across Prague):
·                     Maintaining the current trend, thus increasing DPP’s debt burden on the city’s finances. This could only continue until the level threatened to lead to a downgrade in the city’s financial rating or debt servicing payments became unbearable. More time could be bought by raiding the budgets of other city services.
·                     Diminishing the financing burden of DPP on the city by making passengers pay a much greater proportion (or even all) of the costs of their journeys. Currently tickets and travel passes only cover around a third of operational costs.
·                     Cutbacks in the network and services offered by DPP so that the transport network can break even. Also renegotiate the calendar for already agreed new tram and bus deliveries, as well as a public tender for financial institutions to offer solutions to DPP’s short-term cash crisis. That crisis largely stems from payments which need to be made as a result of past financing packages and transport equipment purchases.
The impact of making passengers meet more of the costs of public transport could be dramatic if the City Council goes down this route. The analysis warns that sharp rises in ticket and travel pass prices will occur if DPP’s expected operational deficit of Kč 1.2 billion this year is to be wiped out. One scenario it presents for wiping out the deficit is for a 40 percent hike in ticket prices this year, with lower increases (3 – 10%) in following years.

The study points out that prices for single trips on buses, trams and the metro are already high compared with the purchasing power of most of Prague’s 1.3 million inhabitants. A charges policy that would favour longer-term travel passes (mostly used by residents) against the simple tickets (mostly bought by tourists) is offered as one means of cushioning the blow of further increases on Prague residents.

Initial responses to the study suggest that the Prague City Council is not keen to hike up ticket or travel pass prices, which were already raised in the summer. The basic one way single ticket is now Kč 24. Prague citizens are estimated to have to work around twice as many minutes as counterparts in Vienna and about a third more than Berlin inhabitants to cover the ticket price.

The survey points out that Prague has boosted services over recent years, with the increase in passengers not keeping up with the improved service. Cuts in services will not necessarily result in a corresponding reduction in passengers, it suggests. Prague’s transport network and services are already the envy of much richer European cities who could better afford to finance similar services, it adds.

A quick-fix solution could be to cut back on purchases of new trams, buses and metro cars. The annual budget for this runs at around Kč 3.5 billion this year and for the following five years. Long-term contracts have been signed for buses with SOR Libchavy and for trams with Škoda Transportation. Lawyers are currently analyzing whether the Škoda Transportation contact can be amended or in some ways got around with regards to the calendar and number of trams, the survey says.

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